U.S. DOE Proposes Regulations for Clean Energy Loan Guarantee Program
The U.S. Department of Energy (DOE) recently issued a Notice of Proposed Rulemaking (NOPR) for its Loan Guarantee program, which is intended to help spur investment in projects that employ new, clean energy technologies.
The
U.S. Department of Energy (DOE) recently issued a Notice of Proposed Rulemaking (NOPR) for its Loan Guarantee program, which is intended to help spur investment in projects that employ new, clean energy technologies.
Projects within the DOE’s Loan Guarantee program will help sustain economic growth, yield environmental benefits and allow for a more stable and secure energy supply. Under the FY’07 Continuing Resolution, Congress provided DOE with authority to issue guarantees for up to $4 billion in loans; and in the Administration’s FY’08 budget, DOE requested $9 billion in loan guarantee authority.
The DOE’s Loan Guarantee program, authorized in Title XVII of the Energy Policy Act of 2005 (EPAct), aims to encourage early commercial use of new or significantly improved technologies in energy projects. Loan guarantees will enable the DOE to share some of the financial risks of projects that employ new technologies that avoid, reduce, or sequester air pollutants and greenhouse gases.
The DOE seeks a broad portfolio of large and small projects, from a wide variety of technologies. The DOE has proposed to guarantee $4 billion in loans for central power generation facilities such as nuclear facilities or carbon sequestration optimized coal power plants; $4 billion in loans for projects that promote biofuels and clean transportation fuels; and $1 billion in loans for projects using new technologies for electric transmission facilities or renewable power generation systems.
The proposed regulations provide the following, among others:
- The Title XVII loan guarantee program will be implemented through a series of solicitations.
- Projects must employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the loan guarantee agreement is executed.
- The DOE may guarantee up to 90 percent of the amount of any loan as long as the DOE does not issue guarantees for more than 80 percent of the total cost of a project.
- In the event of a loan default, DOE will have a superior lien on all project assets pledged as collateral for the guaranteed loan.
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